Japan Airlines - Orient Aviation

COVER STORYPhilippine Airlines (PAL)president, Jaime Bautista,has dragged the airline fromthe depths of bankruptcy tofinancial health and industryrespectability. Its latest financialyear, with net profits rising ahefty 63% to US$28.7 million,represents its best result in overa decade. TOM BALLANTYNEtalked to Bautista about the nextphase of the PAL revival story.PAL pulls outall the stopsOfficially, it will be 2012before Philippine Airlinesis out of rehabilitation.That is when it handsover the final paymentand clears the massive US$2.3 billion debtit had amassed by 1998, when it plungedinto bankruptcy and closed its doors for 14days. But, according to PAL president JaimeBautista, now that the carrier has fought itsway back to liquidity, that day has, in effect,already arrived.“We are up to date with the payment of allour obligations,” said Bautista. “Out of theoriginal $2.3 billion that we restructured, wehave paid almost $1.3 billion. So, with halfour debts already paid, we owe our creditorsa little over a billion dollars and that will bepaid over the next six years.”Astute management and intensive reformshave transformed PAL into a nimbler, moreefficient and customer-focused airline as itcontinues to overhaul its operations underthe watchful eye of an official receiver. It hasimproved schedule reliability and on-timeperformance, slashed costs and dramaticallyimproved its balance book.Now it plans to modernize its fleet, furtherenhance service products and systemsand push into new markets. “We are on theright track and we have something to build ongoing forward,” said 49-year-old Bautista.One of Asia’s oldest airlines – foundedon March 15, 1941 – PAL has had a rollercoasterride since operating the first flight byan Asian carrier across the Pacific in 1946and the first service to Europe by a SoutheastAsian airline, in 1947.PAL has plumbed the depths, now itis back revitalised and ready to tackle thefuture.Reaching this point has not been easy, butBautista is proud that he was able to keep apromise made to PAL majority shareholder,tobacco tycoon Lucio Tan, when the airlinereached agreement with creditors on arehabilitation plan in late 1998 when he waschief financial officer.They insisted Tan inject $200 millionto back it. Bautista told his boss the moneyPhilippine Airlines presidentJaime Bautista: PAL is onthe right track and now hassomething to build onwould never be needed. And he was right.“I am happy to say the $200 million hasnever been touched by Philippine Airlines,”he said. “In the first year of the rehabilitationplan we were expecting losses, but wereported a meagre income, a few millionpesos. Since then there have only been two26 ORIENT AVIATION February 2007